The real costs of negligence claims – who pays?

Niloo Bozorgi looks at the costs of clinical negligence claims for independent practitioners and upcoming changes that will affect them.

First published in Independent Practitioner Today October 2019

Doctors practising in the UK are legally required to hold appropriate clinical negligence cover for the risks of their practice, covering the costs of defending clinical negligence claims, paying any damages and claimant’s legal costs. This is also a professional requirement, as the GMC’s Good Medical Practice states (in paragraph 63) “You must make sure you have adequate insurance or indemnity cover so that your patients will not be disadvantaged if they make a claim about the clinical care you have provided in the UK.”. The GMC do not hold details of doctors’ insurance or indemnity cover, but may ask to check that cover is in place and if not, they may withdraw (or refuse to grant) a licence to practise. Independent practitioners and those undertaking activities such as medico-legal work and professional attendance at charity and sporting events, which are not covered by state backed indemnity, have to ensure they are covered either by membership of one of the Medical Defence Organisations or by a commercial insurance policy.

The overall costs of clinical negligence claims are now widely acknowledged to be at an unsustainable level and the Government has commenced various consultations on developing a cross-government strategy to control costs.

The background to this is of course the cost shifting model on which the justice system in England and Wales operates. Since April 2013, all claims for clinical negligence are subject to qualified one-way costs shifting (QOCS), so that a successful defendant cannot recover their costs from the losing claimant, expect in very rare circumstances. This is a change from the previous position (which still applies to most non-clinical claims) whereby the unsuccessful party in a civil action pays the costs of the successful party.

This model is not without exception and an award in costs is always at the discretion of the court, save in very limited circumstances, who will have regard to all the circumstances of the case, including how the parties have conducted their case.

Either model can lead to high legal costs for independent practitioners facing a claim. Conversely for claimants, QOCS has meant that the possibility of footing the legal costs of their successful opponent is now a lesser consideration when bringing claims. In an era when damages can be as high as £37m[i] and in lower value cases the claimant’s solicitors legal costs can be more than the compensation their clients receive, it is not surprising that indemnity premiums for independent practitioners can be very expensive.

In December 2018, the Government launched a consultation on the introduction of mandatory clinical negligence insurance cover for all regulated independent healthcare practitioners. The consultation closed in February 2019 with changes in legislation mandating such cover remaining the favoured option by the Government.

The consultation paper acknowledges that insurance cover is likely to be more costly for doctors than the discretionary indemnity provided by the medical defence organisations and will be unlikely to provide cover for the legal costs of practitioners facing regulatory proceedings, so that practitioners may have to take out two types of insurance/indemnity policies in order to ensure full protection.

Should they have an adverse history as a result of previous claims or regulatory proceedings, not only will doctors’ premiums increase but the chances of finding an alternative provider will decrease in direct correlation.

The pitfalls faced by practitioners in obtaining and maintain adequate cover that does not exclude relevant activities or have inadequate limits can be manifold. One of the difficulties is that claims made policies will only cover the practitioner in respect of claims reported to the insurer in that year. A practitioner who has received a letter that they do not recognise as a claim or precursor to a claim, will often deal with the letter as a complaint and thus will fail to report it to their insurer in contravention of the agreed policy.

It has been argued that root and branch reform of clinical negligence claims is the only sensible option for sustainably (and affordably) protecting practitioners and patients alike. Whilst such a root and branch reform may not be on the horizon just yet, there are optimistic signs that welcome changes may not be too far distant.

The Civil Justice Council working group has been set up to devise a bespoke process and Fixed Recoverable Costs (FRC) regime for clinical negligence cases valued up to £25,000 and is due to report later this year. A FRC regime will provide both parties with certainty as to the maximum amount they could be liable for and can ensure proportionality on costs. In time RFC may be extended to higher value cases, thus providing long-awaited stability on premium prices.

[i] Boy, Aged 6, West Herefordshire Hospitals NHS Trust (2018)